NTPC's Lanka venture faces hurdles

TNN|

Jul 21, 2007, 01.35 AM IST

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NEW DELHI: Power major NTPC’s first overseas venture, a 500-MW coal-based plant in Sri Lanka, seems to have got tangled in a diplomatic web. The plant is to be set up as a joint venture between NTPC and Sri Lanka’s Ceylon Electricity Board.

A site for the project is yet to be finalised even though seven months have passed since the memorandum of agreement between NTPC, Ceylon Electricity Board (CEB) and the Government of Sri Lanka was signed. Sources said that a team from India is expected to visit Sri Lanka shortly to assess possible sites. The plant is supposed to come online in 2011.

While the Indian power major had shown a preference for the Trincomalee harbour, the Sri Lankan government, seeking political mileage from the power plant and the economic opportunities it would provide, pushed for setting up the plant in Sampur, also in the Trincomalee district. This is an area wrested out of LTTE control by the government in September last year. So keen were the Sri Lankans that President Mahinda Rajapaksa made an announcement to this effect in February.

The announcement came as a surprise to India, which has no intention of getting caught up in Lanka’s domestic politics. Though no site had been finalised by then, the Indian side had indicated a strong preference for a site close to the Trincomalee harbour.

Given the impasse, alternative sites are also being suggested. Sources said that the Sri Lankan government had given suggestions for three sites which the Indian side is considering. Diplomatic sources said the technical team of experts which will be sent to survey the three sites would include scientists who would consider different aspects, including displacement of people, distance of the jetty from the site and the depth of the sea, before deciding on a site.

NTPC, in consultation with the government, had identified a site near the Indian Oil Corporation (IOC) oil complex, close to Trincomalee harbour, as the ideal location for the plant. Technical issues apart, the Indian power major had indicated a preference for this site as the infrastructure was in place. Since the plant would be fuelled by coal imported from Indonesia, a site close to an existing harbour would make transport of fuel cost-effective and easier.

Sources in NTPC said they did not have any technical problems with Sampur. However, the absence of infrastructure in the area would delay the project. The issue of displacement of people is also another factor to consider at this site.

It is not just India which is not keen on setting up the plant in Sampur. There is opposition in the Tamil-dominated area to the government plan to implement a High Security Zone (HSZ). The Tamil National Alliance, a party sympathetic to the LTTE, has objected to both the High Security Zone and the proposal to set up the NTPC-CEB plant in the area.

(This article was originally published in The Times of India)

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